Covid-19: UK self-employed to receive 80% of salary

Self-employed workers hit by the coronavirus crisis will receive a government grant worth 80% of earnings under a new scheme unveiled on Thursday, but would have to wait until June to get the cash, Finance Minister Rishi Sunak said on Thursday.

The scheme, worth an estimated £35bn, would be backdated to March and capped at £2,500 a month for three months - matching the government's pledge to staff employees last Friday.

Sunak told a Downing Street news conference via video link the pay would be calculated using average monthly profits over last three financial years. The scheme will only be open to those who are already self-employed and have a self-assessment tax return for 2019.

In order to give more people a chance to apply, Sunak said those who had missed the January 31 tax filing deadline would be given four weeks to get their returns in.

Those with trading profits up to £50,000 a year would qualify, he added, and 95% of those who are majority self-employed would benefit. People would also be allowed to continue trading in the interim.

Sunak also hinted their would need to be a reckoning further down the line when the crisis was over, highlighting the inconsistency between what the employed and self-employed pay in terms of tax, despite the actions taken "treating them the same".

"It does throw into light the question of inconsistency and if that is fair," he said, but stressed this was not a signal that the tax system would be reviewed.

The chancellor says the government had been "designing these things at pace", so, while schemes may have flaws, "given the circumstances, we shouldn't let the perfect be the enemy of the good".

WORKERS 'NEED CASH NOW' - UNIONS

Trades Union Congress general-secretary Frances O’Grady said welcomed the move and said large-scale wage subsidies "are the best way to boost household finances and keep businesses running. And they’ll help our economy bounce back after this crisis".

“Employers across the economy can now be confident that they will be able to pay their wage bills. They must urgently reassure their staff that their jobs and livelihoods are safe," she said.

“Unions will continue to work with business and government to protect jobs and livelihoods.”

However Unite general-secretary Len McCluskey criticised the delay in payments until June, saying it would force workers "to conclude that they have to still go to work, putting themselves and others at risk".

"The fact that cash will not get to those workers who do qualify for assistance until June is alarming. The promise of money in weeks to come doesn't pay the rent or put food on the table in April and May," he said.

AJ Bell chief investment officer Kevin Doran said the scheme showed the government was "keen to keep the lights on whilst the nation’s workers are asked to hibernate for a while".

"With further income support from the state unlikely, the focus must now move towards giving people more certainty around their expenses," he added.

“On that score, our proposed plan to scrub interest on all debts payable to UK banks for a period of three to six months should be welcomed. Funded by the banking sector itself, this foregoing of interest would tip the banking sector into a loss for the year, but seems only fair for a sector bailed out by society when the boot was on the other foot."

Doran also called on the more fortunate in society to "find their altruistic spirits" and suggested a "pay now, buy later" package to support the self employed.

"Purchasing goods and services... up front with delivery made when all of this is over is a ready way in which the nation can rally around those in need at this time,” he said.